What happened
Shares of several brick-and-mortar retail chains were moving up on Wednesday after the biggest U.S. mall operator confirmed that it will reopen malls and outlet centers in 10 states over the coming weekend.
Here's where things stood as of 2:00 p.m. EDT for these four companies' stocks, relative to their closing prices on Tuesday.
- Designer Brands (DBI -2.17%) was up 10.1%.
- Gap (GPS -3.85%) was up 4%.
- TJX Companies (TJX -0.33%) was up 5.1%.
- Urban Outfitters (URBN -0.94%) was up 5.5%.
So what
News that mall owner Simon Property Group (SPG -1.10%) will reopen 49 of its shopping centers between Friday and next Monday sparked a rally in retail-chain stocks on Tuesday. That rally appears to be continuing today, as a broad reopening of the U.S. economy next month now seems more likely.
Opening in May? Investors are hoping so. Image source: Gap.
All four of these companies closed their brick-and-mortar retail stores last month. While Designer Brands, Gap, and Urban Outfitters have continued to make sales via their online storefronts, all are suffering from steep drops in revenue.
As investors who follow consumer discretionary stocks know, getting stores reopened -- even with limited hours and enhanced safety protocols -- will be bullish for all four companies. But it could be more bullish for off-price store operators like TJX and (to some extent) Designer Brands, which could stand to benefit from relatively higher store traffic as wary consumers avoid full-price shopping.
At least one analyst is thinking along the same lines. In a note on Wednesday morning, Atlantic Equities analyst Daniela Nedialkova upgraded TJX to the equivalent of buy, from hold, with a price target of $60.
Nedialkova noted that off-price stores like TJX's chains (which include TJ Maxx and Marshalls, among others) tend to gain market share during difficult economic conditions. She thinks the company as a whole is particularly well positioned to recover more quickly than other retail operators once stay-at-home orders are lifted.
I think that makes sense, and it could prove to be true of Designer Brands' DSW Shoe Warehouse chain and possibly Gap's Old Navy stores as well.
Now what
It certainly seems that May could be an eventful month for all four companies, with at least some stores likely to reopen before month-end. There's a lot that's still unknown, but investors probably won't have to wait too long for updates from management teams.
Urban Outfitters' next quarterly earnings report will be on May 19. Designer Brands, Gap, and TJX haven't yet announced dates for theirs, but all three companies typically report quarterly earnings in late May.
